Why investors should scramble to buy parking garages north of 60th Street

New fees expected to be introduced in 2023 will decrease traffic in the city

A parking garage in Manhattan (Credit: Wikipedia)
A parking garage in Manhattan (Credit: Wikipedia)

It’s not just drivers from the suburbs that will be smarting from the new congestion pricing plan for Manhattan. Parking garage owners in the prime office districts will also be hit hard.

While the number of parking garages has increased across Manhattan, the number in Midtown and Downtown have dropped 25 percent in the past decade to 330 lots, according to The Wall Street Journal. Congestion fees are expected to be introduced in 2021, which will charge motorists around $11.50 to enter Manhattan below 60th Street.

The Journal reported that some Manhattan garage owners have filed plans to demolish and convert to retail or apartment buildings in the past five years.

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Calls for congestion pricing have been around for years, and became more concrete after London introduced fees to drive in its central district in 2002

The Real Estate Board of New York has supported congestion pricing, leaving parking garage landlords to fend for themselves. The industry has already reported declining revenues thanks to the rise of ride-hailing firms Lyft and Uber.

But congestion pricing could have the opposite effect for parking garages located just outside of the fee zone, where drivers are more likely to park and then walk to work. The number of garages for all of Manhattan has in fact increased, due to more private garages in apartment buildings.

“Right now I would love to buy a garage just north of 60th Street,” Bob Knakal, the New York City chair of investment sales at JLL, told the Journal. [WSJ] — David Jeans